Oil price increases of 2004 and 2005

The price of standard crude oil on NYMEX was under $25/barrel in September 2003. By August 11, 2005, the price had been above $60/barrel for over a week and a half. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. The average retail price was nearly $3.04 per gallon. The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]

Demand

High demand is led by the U.S. market, the source of an increasing percentage of the world's demand for petroleum. The U.S. economy currently accounts for one-quarter of all demand. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years.

Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. Department of Energy Energy Information Administration estimates: [6]

China: 38.9%

US: 19.4%

Asia outside Japan and China: 13.8%

Canada: 4%

UK: 3.5%

combined other non-OECD: 21%

Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Supply

There are a number of reasons why oil traders feel that oil supplies might be reduced. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region. The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. market. Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7]

World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). This rate of increase is faster than that of any other date in the past. Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. One other important cause is the United States dollar's slump against the Euro. Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe.

Causes

Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars.

Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue.

Still others suggest that the main issue is a lack of energy efficiency in industry. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy.

Spring & Summer 2005 increase

Overnight gas price hike shown at a Chicago area bp station (background). The Shell station (foreground) has not yet posted the 12 cent price hike.

After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. In April 2005 the price began to fall, reaching $53.32 on April 9. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60.

Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. influence. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%.

While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand.

Winter 2006 increase

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. This was the highest increase since early October 2005. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. Continued concerns about Iran raised the price to $68.38 on January 31.[10]

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Hurricane Katrina

Gas price hike shown at a Shell station.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. The Gulf Coast is home to a major portion of America's refining capacity. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Port Fourchon has also suffered long term damage. Louisiana Offshore Oil Port has not. [11]

Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. [14] Many of these were blamed on panic buying. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]

On 5:10 p.m. EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity.

In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. These supplies would begin entering the US markets within two weeks of 2 September. [19] [20] The press release from the IEA states, "... the implications for the oil market are global."[21]

Effects

There is controversy regarding the potential effects of oil-price shocks. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. Nevertheless, that loss of revenue would put a strain on government balance sheets. The American Strategic Petroleum Reserve could on its own supply current U.S. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. This could well be the case if a major storm were to hit the gulf, where the reserve is located. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Inflation has increased. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. This was driven by a 4.2% increase in energy costs. As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation.

Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. For example, China and India are currently heavily investing in natural gas facilities. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil.

The increased price of oil also makes previously impractical sources of oil attractive to businesses. The most prominent example of this are the massive reserves of the Canadian tar sands. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. Recent months have seen billions of dollars invested in the oil sands.

The increased price of oil might also encourage greater fuel efficiency. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms.

USA Stock markets

The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. [25]

Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. [26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. This will likely cause inflationary pressures.

Asia Pacific Region (excludes Australasia)

The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina.

In the Philippines, the oil crisis caused its public to call for immediate government assistance. [27] New sources of energy were sought to deal with the crisis.[28]

A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]

The Indonesian president had instituted subsidies to control the price of gasoline.[30]

Sub-Saharan Africa

High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. High oil prices have created an oil supply instability, per barrel price instability or both. In some cases this has led to fuel rationing being enacted.

Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. These nations must resort to limiting imports or rationing their existing supplies.

Latin America & Caribbean

Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. [31]

At the same time, Cuba has experienced electricity shortages.

Gulf States & Eurasian Arab-Islamic Regions

Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]

Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]. . [31]. For the 2006 Atlantic hurricane season, Atlantic tropical storms will be named:. Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. If there are more than 21 named storms in any given season, storms will be named for the letters of the Greek alphabet, starting with Alpha and following the list in order (like was used in 2005). In some cases this has led to fuel rationing being enacted. The 2006 list will be used again in 2012, except for any names that are retired before then.

High oil prices have created an oil supply instability, per barrel price instability or both. In the 2006 Atlantic hurricane season, Kirk replaced Keith, which was retired in 2001 following its effects during the 2000 Atlantic hurricane season. High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. The deadliest or most notable storms have their names retired from the rotation. . Names are used on a six-year rotation. The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina. The World Meteorological Organization now creates and maintains the annual lists.

This will likely cause inflationary pressures. Initially, storms only had female names, but after some protest, male and female names were alternated beginning in 1979. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. This replaced the old system which used map coordinates for identification. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. In 1953, the Center began naming storms which reach tropical storm intensity. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Outside of the hurricane season, the specialists concentrate on public education efforts.

[26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Each specialist signs forecasts and advisories with their last name, sometimes issuing joint statements with other NHC staff members. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. They forecast and recommend watches and warnings. Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. The specialists coordinate with officials in each country likely to be affected. [25]. Public advisories are issued more often when the storm threatens land.

These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. Whenever a depression appears, they issue advisories every six hours until the storm runs its course. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. The specialists work rotating eight-hour shifts from May through November, monitoring weather patterns in the Atlantic and Eastern Pacific oceans. The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. The NHC's hurricane specialists are the chief meteorologists that predict the actions of tropical storms. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms. .

There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. The current director of the National Hurricane Center is Max Mayfield. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. Former NHC Director Bob Simpson was co-creator of the Saffir-Simpson Hurricane Scale. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. In 1995, the NHC moved into a new hurricane resistant facility on the campus of Florida International University. The increased price of oil might also encourage greater fuel efficiency. The radar was replaced with a WSR-88D NEXRAD system.

Recent months have seen billions of dollars invested in the oil sands. In 1992, Hurricane Andrew blew the WSR-57 weather radar and the anemometer off the roof of Gables One Tower, then the location of the NHC's offices. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. In 1984, the NHC was separated from the Miami Weather Service Forecast Office, which was given the responsibility of handling standard weather forecasting and observation for southeastern Florida. The most prominent example of this are the massive reserves of the Canadian tar sands. The Miami office was designated the National Hurricane Center in 1967, and given responsibility for Atlantic tropical cyclones. The increased price of oil also makes previously impractical sources of oil attractive to businesses. As communications and forecasting evolved, responsibility for issuing hurricane warnings was eventually centralized in the Miami Weather Bureau office.

Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil. The National Hurricane Center has its roots in an 1898 declaration by then-President William McKinley for the Weather Bureau (now the National Weather Service) to establish a hurricane warning network. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. As such, the NHC is the central clearinghouse for all tropical cyclone forecasts and observations occurring in these areas, regardless of their effect on the US. For example, China and India are currently heavily investing in natural gas facilities. Although an agency of the United States, the World Meteorological Organization has designated the NHC as Regional Specialized Meteorology Center for the North Atlantic and eastern Pacific. Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. When tropical storm or hurricane conditions are expected within 36 hours, the center issues the appropriate watches and warnings via the news media and NOAA Weather Radio.

As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation. National Hurricane Center is the division of National Weather Service's Tropical Prediction Center responsible for tracking and predicting the likely behavior of tropical depressions, tropical storms and hurricanes. This was driven by a 4.2% increase in energy costs. The U.S. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. Max Mayfield 2000- Current. Inflation has increased. Jerry Jarell 1997- 1999.

Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Bob Burpee. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Bob Sheets. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. Neil Frank. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. Robert Simpson.

This could well be the case if a major storm were to hit the gulf, where the reserve is located. Stacy Stewart, specialist since 1999. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. Richard Pasch, specialist since 1989. The American Strategic Petroleum Reserve could on its own supply current U.S. Dr. Nevertheless, that loss of revenue would put a strain on government balance sheets. Richard Knabb, specialist since 2005.

Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. Dr. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. Franklin, specialist since 1999. There is controversy regarding the potential effects of oil-price shocks. James L. the implications for the oil market are global."[21]. Jack Beven, specialist since 1999.

[19] [20] The press release from the IEA states, ".. Dr. These supplies would begin entering the US markets within two weeks of 2 September. Lixion Avila, specialist since 1987. In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. Dr. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity.

EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. On 5:10 p.m. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]. [14] Many of these were blamed on panic buying.

Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. [11].

Louisiana Offshore Oil Port has not. Port Fourchon has also suffered long term damage. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. The Gulf Coast is home to a major portion of America's refining capacity.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. Continued concerns about Iran raised the price to $68.38 on January 31.[10]. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. This was the highest increase since early October 2005.

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand.

Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. influence. Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S.

In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. In April 2005 the price began to fall, reaching $53.32 on April 9. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46.

The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy. Still others suggest that the main issue is a lack of energy efficiency in industry.

A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term.

Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices.

Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe. One other important cause is the United States dollar's slump against the Euro. The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. This rate of increase is faster than that of any other date in the past. World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7].

Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. market. In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region.
There are a number of reasons why oil traders feel that oil supplies might be reduced. Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Department of Energy Energy Information Administration estimates: [6]. Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years. economy currently accounts for one-quarter of all demand.

The U.S. market, the source of an increasing percentage of the world's demand for petroleum. High demand is led by the U.S. .

The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]. The average retail price was nearly $3.04 per gallon. In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

By August 11, 2005, the price had been above $60/barrel for over a week and a half. The price of standard crude oil on NYMEX was under $25/barrel in September 2003. At the same time, Cuba has experienced electricity shortages. These nations must resort to limiting imports or rationing their existing supplies.

Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. The Indonesian president had instituted subsidies to control the price of gasoline.[30]. A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]. [27] New sources of energy were sought to deal with the crisis.[28].

In the Philippines, the oil crisis caused its public to call for immediate government assistance. combined other non-OECD: 21%. UK: 3.5%. Canada: 4%.